small business

Measuring Business Success

March 19th 2011
Author -

How do you measure the success of your business? Cash in the register? Number of rooms booked? Number of covers per night? I am not a business major, these are just observations from running my small business. I am sure you can study many aspects of this, I just wanted to cover how what metrics you choose can shape your business.

From the start of my Armidale web design business I measured success by the number of clients I had. I wasn't too concerned about what I was charging. If I had work to do for someone, the business was moving forward. The web design industry is a bit unique too because of how quickly it evolves. Some people can get a basic website done and it can serve them well for many years. But if you want your website performing at its peak, you need to review and update it every now and then. So my philosophy was get them in the door and then provide ongoing support and updates.

Since these beginnings I have come to understand just “Number of clients” is not a good metric. Having low prices attracts certain types of client and in some cases dissuades other clients. High maintenance, low paying clients can really sap your energy. Clients with a decent budget and an open mind can really invigorate you. So in my drive for client numbers I neglected client profiling.

I have now included as a business success metric, a client type. The more ideal clients I have, the more successful my business will be. This metric changes the way I work. With just “number of clients” as a metric I was getting the work done with any client and getting it out the door. Including “Ideal client type” I can now spend time on improving relationships, communicating and moulding ideal clients. This is predominately to do with me, not the client. It is my responsibility to communicate and educate the client about options, and also about business processes that will aid the project.

Now a business will not operate if there is not money coming in. So whatever metrics I devise have to make underlying monetary sense. “Number of clients” means more people paying me, so that should work. “Ideal Clients” means clients with disposable income and aware of the potential of the web. This leads to my third metric. “Earn its keep”. A website I make for a client has to serve the purpose it was paid for, there has to be responsibility and accountability for its ongoing performance. If I can tie a website's expense to its performance, then my clients will be predisposed to pay ongoing costs and upgrades. Money continues to come into my business. So when building a website it is important for me to discuss with clients ways to measure website performance. How would my client's business assess the success of the website? Number of visitors per year? Number of bookings through the website? Number of sales? Presence in key searches? My third metric aims to justify my clients continuing their relationship with me.

So these changes in how I measure the success of my business has led to a change in how I do business. Departing from the pure “Number of clients” game has meant I am free to build relationships, continue communication and become indispensable for my client's business.

How is the way you measure business success guiding you and your staff? Is there changes to these metrics or additional metrics you can add, that will see your business grow in the direction you want? Have fun.